1
EXHIBIT 2.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT effective as of January 14, 2000 between Sonomed,
Inc. (the "Employer"), a New York corporation, and Xxxxx Xxxx (the "Employee").
RECITALS:
The parties hereto desire to enter into this Agreement to provide for
the employment of the Employee by the Employer and for certain other matters in
connection with such employment, all as set forth more fully in this Agreement.
NOW, THEREFORE, in consideration of the premises and covenants set
forth herein and intending to be legally bound hereby, the parties to this
Agreement hereby agree as follows:
1. DUTIES. The Employer agrees that the Employee shall be
employed by the Employer during the term of this Agreement to serve as
President. In such capacity, the Employee shall report to the Chief Executive
Officer of the Employer and shall have such duties as are typically performed by
a president of a company such as the Employer together with such other duties,
commensurate with the Employee's position as President, as may be reasonably
assigned to the Employee from time to time by the Chief Executive Officer. The
Employee agrees to be so employed by the Employer and to devote his best efforts
and substantially all of his business time, during normal business hours
consistent with the Employee's position, to advance the interests of the
Employer and discharge adequately his duties hereunder, except that the Employee
shall not be precluded from pursuing outside interests such as social activities
or charitable or non-profit or community endeavors provided the same shall not
materially interfere with the Employee's performance of his duties hereunder and
shall not be precluded from making personal investments unrelated to the
business and operations of the Employer.
2. PLACE OF PERFORMANCE. In connection with his employment by the
Employer, the Employee will be based at the executive offices of the Employer at
0000 Xxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxx Xxxx or such other place within a 30-mile
radius of Flushing, New York (the "Designated Area") as the Employer may
designate from time to time as the principal executive offices of the Employer,
except for reasonably required travel in connection with the Employer's
business. If the Employer shall desire to assign the Employee to any location
outside of the Designated Area, the Employer shall first be required to obtain
the consent of the Employee to such assignment, which consent may be withheld by
the Employee in his sole and absolute discretion.
3. TERM. Subject to Sections 5 and 6 hereof, the initial term of
the Employee's employment hereunder shall commence on the date hereof and shall
continue for a period of three years. This Agreement shall be renewed
automatically upon the expiration of its initial term and each renewal term for
successive terms of one year unless either party notifies the other party in
writing at least 90 days prior to the expiration of any term of such party's
determination not to renew this Agreement beyond the then existing term.
2
4. COMPENSATION.
(a) BASE SALARY. During the term of his employment under this
Agreement, the Employee shall be paid an annual base salary (the "Base Salary")
of $175,000. Such Base Salary shall be reviewed annually, thereafter on the
anniversary date of this Agreement by the Employer's Board of Directors and
shall be increased for each subsequent 12-month period by a percentage not less
than the sum of (i) the percentage increase in the cost of living in the County
of Nassau, State of New York for the year then ended and (ii) 2%; provided,
however, that in no event shall any annual increase in the Base Salary exceed
5%. The Employee's Base Salary shall be paid in accordance with the Employer's
regular payroll practices.
(b) BONUS PROGRAM. The Employee shall be entitled to
participate in a bonus program to be established by the Employer pursuant to
which the Board of Directors of the Employer, in its discretion, may award
bonuses to key employees of the Employer based upon the achievement of
individual and corporate objectives and such other factors as the Board of
Directors shall determine.
(c) AUTOMOBILE. During the term of this Agreement the Employer
shall provide the Employee with the full-time use of an automobile at a cost to
the Employer not to exceed the amount of $850 per month.
(d) FRINGE BENEFITS. The Employee shall be entitled to
participate in all insurance, vacation and other fringe benefit programs of the
Employer to the extent and on the same terms and conditions as are accorded to
other officers and key employees of the Employer and its parent, Escalon Medical
Corp. ("Escalon"); provided, however, that the Employee shall be entitled to at
least four weeks paid vacation per calendar year.
(e) REIMBURSEMENT OF EXPENSES. The Employee shall be
reimbursed for all normal items of travel and entertainment and miscellaneous
expenses reasonably incurred by him on behalf of the Employer, provided that
such expenses are documented and submitted in accordance with the reimbursement
policies of the Employer as in effect from time to time.
(f) ENTIRE COMPENSATION. The compensation provided for in this
Agreement shall constitute full payment for the services to be rendered by the
Employee to the Employer hereunder.
5. DEATH OR TOTAL DISABILITY OF THE EMPLOYEE.
(a) DEATH. In the event of the death of the Employee during
the term of this Agreement, this Agreement shall terminate effective as of the
date of the Employee's death, and the Employer shall not have any further
obligation or liability under this Agreement except that the Employer: (i) shall
pay to the Employee's estate any portion of the Employee's Base Salary for the
period up to the Employee's date of death that remains unpaid, (ii) shall pay to
the Employee's estate all benefits that shall have accrued to the Employee under
any employee benefit plan of the Employer prior to the date of death that remain
unpaid and all accrued bonus, and
-2-
3
(iii) shall continue to pay to the Employee's estate an amount equal to the
Employee's Base Salary, as in effect on the date of death, for a period of three
months after the date of death.
(b) TOTAL DISABILITY. In the event of the Total Disability (as
that term is hereinafter defined) of the Employee at any time during the term of
this Agreement, the Employer shall have the right to terminate the Employee's
employment hereunder by giving the Employee 30 days' written notice thereof,
and, upon expiration of such 30-day period, the Employer shall not have any
further obligation or liability under this Agreement except that the Employer:
(i) shall pay to the Employee any portion of the Employee's Base Salary for the
period up to the date of termination that remains unpaid, (ii) shall pay to the
Employee all benefits that shall have accrued to the Employee under any employee
benefit plan of the Employer prior to the date of termination that remain unpaid
and all accrued bonus, and (iii) shall continue to pay to the Employee an amount
equal to his Base Salary on the date of termination for a period of three months
after the date of termination.
The term "Total Disability," when used herein, shall mean a mental or
physical condition which in the reasonable opinion of the Board of Directors of
the Employer renders the Employee unable to carry out the job responsibilities
he held or the tasks that he was assigned at the time the disability was
incurred for a period of six consecutive months or 210 days in any consecutive
365-day period or for such shorter period of time, if any, as the Employee shall
be eligible to receive benefits under any long term disability insurance
provided by the Employer. During any period that the Employee fails to perform
his duties hereunder as a result of incapacity due to physical or mental
illness, the Employee shall continue to receive his full compensation as
provided for in Section 4 at the rates then in effect for such period until his
employment is terminated pursuant to Section 5(b) hereof.
6. TERMINATION.
(a) TERMINATION BY THE EMPLOYER FOR CAUSE. The Employer may
discharge the Employee and thereby terminate his employment hereunder for
"Cause," which shall mean and be limited to any of the following reasons: (i)
habitual intoxication or abuse of a controlled substance; (ii) conviction of a
felony; (iii) adjudication as an incompetent; (iv) the failure of the Employee
to faithfully perform his duties hereunder or a breach by the Employee of any
material term of this Agreement, that is not cured within 30 days after written
notice from the Employer, which notice shall specify the nature of the failure
or breach; (v) material violation of an accounting or conflict of interest
policy of the Employer; (vi) the Employer shall have engaged in conduct that, in
the reasonable opinion of the Board of Directors of the Employer, has injured or
could foreseeably injure the business or reputation of the Employer in any
material respect; or (vii) misappropriation of any corporate funds or property
of the Employer, theft, embezzlement or fraud. In the event that the Employer
shall discharge the Employee pursuant to this Section 6(a), the Employer shall
not have any further obligation or liability under this Agreement, except that
the Employer (i) shall pay to the Employee any portion of the Employee's Base
Salary for the period up to the date of termination that remains unpaid, (ii)
shall pay to the Employee all benefits that shall have accrued to the Employee
under any employee benefit plan of the Employer prior to the date of termination
that remain unpaid and all accrued bonus, and (iii) if such
-3-
4
termination shall occur during the initial term of this Agreement, shall pay to
the Employee an amount equal to the Employee's Base Salary for a period of one
year after the date of termination, payable in twelve equal monthly
installments. Notwithstanding anything contained herein or at law to the
contrary, in such event the Employee shall not have any obligation to mitigate
damages, and the Employer shall not be entitled to any offset for any
compensation or other amounts earned by the Employee from other sources during
such period.
(b) TERMINATION BY THE EMPLOYEE. The Employee may terminate
this Agreement if the Employer shall breach any material term of this Agreement
that is not cured within 30 days after written notice from the Employee (ten
days for any breach arising from the failure of the Employer to make any payment
to the Employee required hereunder), which notice shall specify the nature of
the breach.
(c) OTHER TERMINATIONS. If the Employer shall terminate the
employment of the Employee prior to the expiration of any term of this Agreement
for any reason other than one specified in Section 6(a) hereof or if the
Employee shall terminate this Agreement pursuant to Section 6(b), the Employee
(i) shall be paid the greater of (A) an amount equal to the Employee's Base
Salary for a period of six months after the date of termination, payable in six
equal monthly installments, and (B) the Employee's Base Salary for the balance
of the then existing term of this Agreement, and (ii) shall continue to receive
all health, life and disability insurance benefits for the period during which
the Base Salary continues to be paid. Notwithstanding anything contained herein
or at law to the contrary, in such event the Employee shall not have any
obligation to mitigate damages, and the Employer shall not be entitled to any
offset for any compensation or other amounts earned by the Employee from other
sources during such period.
7. NON-DISCLOSURE AND NON-COMPETITION.
(a) NON-DISCLOSURE. The Employee acknowledges that in the
course of performing services for the Employer, the Employee may obtain
knowledge of the Employer's business plans, products, processes, software,
know-how, trade secrets, formulas, methods, models, prototypes, discoveries,
inventions, improvements, disclosures, customer and supplier lists, names and
positions of employees and/or other proprietary and/or confidential information
(collectively the "Confidential Information"). The Employee agrees to keep the
Confidential Information secret and confidential and not to publish, disclose or
divulge the Confidential Information to any other party, and the Employee agrees
not to use any of the Confidential Information for the Employee's own benefit or
to the detriment of the Employer without the prior written consent of the
Employer, whether or not such Confidential Information was discovered or
developed by the Employee. The Employee also agrees not to divulge, publish or
use any proprietary and/or confidential information of others that the Employer
is obligated to maintain in confidence.
(b) NON-COMPETITION. The Employee agrees that: (i) during his
employment by the Employer hereunder and (ii) unless this Agreement shall be
terminated by the Employer without Cause, the Employer shall elect not to renew
this Agreement upon the expiration of its term or the Employee shall terminate
this Agreement pursuant to Section 6(b) hereof, for an additional period of two
years after the termination of the Employee's employment hereunder,
-4-
5
neither the Employee nor any firm or corporation in which he may be interested
as a partner, trustee, director, officer, employee, agent, shareholder, lender
of money or guarantor, or for which he performs services in any capacity
(including as a consultant or independent contractor) shall at any time during
such period be engaged, directly or indirectly, in any Competitive Business (as
that term is hereinafter defined); provided, however, that the business
activities of the Employee on behalf of any other entity that is in control of,
controlled by or under common control with the Employer shall not be deemed to
violate the Employee's undertakings as set forth in this Section 7(b). Nothing
herein contained shall be deemed to prevent the Employee from investing in or
acquiring one per cent or less of any class of securities of any company engaged
in a Competitive Business if such class of securities is listed on a national
securities exchange or is quoted on the Nasdaq Stock Market. For purposes of
this Section 7(b), the term "Competitive Business" shall mean any business that
designs, assembles, manufactures, markets, sells or licenses any product or
provides any service that was designed, assembled, manufactured, marketed, sold,
licensed or provided by the Employer at any time while this Agreement shall be
in effect. Notwithstanding anything to the contrary set forth herein, the
foregoing covenant not to compete shall be in addition to the covenant not to
compete set forth in the Stock Purchase Agreement (the "Stock Purchase
Agreement") dated on or about the date hereof among Escalon, the Employer and
the former stockholders of the Employer (including the Employee), and nothing
set forth herein shall be construed to limit the covenant not to compete of the
Employee set forth in the Stock Purchase Agreement.
(c) INJUNCTIVE RELIEF. The Employee acknowledges that his
compliance with the agreements in Sections 7(a) and 7(b) hereof is necessary to
protect the good will and other proprietary interests of the Employer and that
he is one of the principal executives of the Employer and conversant with its
affairs, its trade secrets, its customers and other proprietary information. The
Employee acknowledges that a breach of his agreements in Sections 7(a) and 7(b)
hereof could result in irreparable and continuing damage to the Employer for
which there will be no adequate remedy at law; and the Employee agrees that in
the event of any breach of the aforesaid agreements, the Employer and its
successors and assigns shall be entitled to injunctive relief and to such other
and further relief as may be proper.
(d) SURVIVAL OF COVENANTS. The provisions of this Section 7
shall survive the termination of this Agreement to the extent applicable after
the termination hereof.
8. INVENTIONS AND DISCOVERIES. The Employee hereby transfers and
assigns to the Employer all right, title and interest in and to all ideas,
formulae, programs, systems, improvements, devices, processes, business
concepts, discoveries and inventions (hereinafter referred to singly as a
"Discovery" and collectively as "Discoveries"), whether or not suitable for
patent or copyright, that the Employee, while employed by the Employer,
conceives, makes, develops, acquires or reduces to practice, whether alone or
with others and whether during or after usual working hours, and that are
related in any respect to the Employer's business or interests, or are used or
usable by the Employer, whether such Discovery is a machine, apparatus, process,
article or other subject, including any and all domestic and foreign patent
rights or copyrights therein and any renewals thereof. On request of the
Employer, the Employee shall (without any additional compensation) from time to
time during and after the expiration or termination of his employment,
-5-
6
execute such further instruments (including, without limitation, copyright
registrations, applications for letters patent and assignments of either) and do
all such other acts and things as may reason ably be deemed necessary or
desirable by the Employer to protect and/or enforce its rights in respect of any
Discovery. All expenses of filing or prosecuting any copyright or any patent
application shall be borne by the Employer, but the Employee shall cooperate in
filing and/or prosecuting any such applications and, if the Employee is not then
employed by the Employer, the Employee shall be entitled to receive reasonable
compensation for the time devoted thereto.
9. EMPLOYER DOCUMENTATION. The Employee shall hold in a fiduciary
capacity for the benefit of the Employer all documentation, disks, programs,
data, records, drawings, manuals, reports, sketches, blueprints, letters, notes,
notebooks and all other writings, electronic data, graphics and tangible
information and materials of a secret, confidential or proprietary information
nature relating to the Employer or the Employer's business that are in the
possession or under the control of the Employee.
10. SUPERSEDES OTHER AGREEMENTS. This Agreement supersedes and is
in lieu of any and all other employment arrangements between the Employee and
the Employer, but shall not supersede any existing confidentiality or
nondisclosure agreements between the Employee and the Employer.
11. AMENDMENTS. Any amendment to this Agreement shall be made in
writing and signed by the parties hereto.
12. ARBITRATION. Any dispute, claim or controversy arising out of
or in connection with this Agreement, the transactions contemplated hereby or
the relationship of the parties as employer and employee, including, without
limitation, the construction, validity, performance or termination thereof and
post-termination rights and obligations thereunder, shall be finally settled by
arbitration in accordance with the Commercial Arbitration Rules then in effect
of the American Arbitration Association. The arbitrators shall have no power to
waive, alter, amend, revoke or suspend any of the provisions of this Agreement.
Such arbitration shall be held in New York City. Judgment upon the award
rendered in any such arbitration may be entered in any court having jurisdiction
thereof. Nothing contained in this Section 12 shall be deemed to limit or
preclude the right of any party to seek to obtain in any court or other tribunal
of competent jurisdiction any interim relief or provisional remedy, including,
without limitation, injunctive relief. Seeking or obtaining such interim relief
or provisional remedy in such court or other tribunal shall not be deemed to be
a waiver of the right to arbitration hereunder. All notices of demand for
arbitration hereunder or service of process in respect thereof shall be deemed
sufficient if served in accordance with Section 16.
13. ENFORCEABILITY. If any provision of this Agreement shall be
invalid or unenforce able, in whole or in part, then such provision shall be
deemed to be modified or restricted to the extent and in the manner necessary to
render the same valid and enforceable, or shall be deemed excised from this
Agreement, as the case may require, and this Agreement shall be construed and
enforced to the maximum extent permitted by law as if such provision had been
originally
-6-
7
incorporated herein as so modified or restricted or as if such provision had not
been originally incorporated herein, as the case may be.
14. CONSTRUCTION. This Agreement shall be construed and
interpreted in accordance with the internal laws of the State of New York.
15. ASSIGNMENT.
(a) BY THE EMPLOYER. The rights and obligations of the
Employer under this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and assigns of the Employer, provided that the
Employer shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Employer, by written agreement in form and substance
satisfactory to the Employee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Employer would be
required to perform if no such succession had occurred. As used in this
Agreement, the Employer shall mean the Employer and any of its subsidiaries and
any successor to all or substantially all of the Employer's business or assets
that becomes bound by all of the terms and conditions of this Agreement, whether
by the terms hereof, by operation of law, or otherwise. Except as provided in
this Section 15(a), this Agreement and the obligations created hereunder may not
be assigned by the Employer.
(b) BY THE EMPLOYEE. This Agreement and the obligations
created hereunder may not be assigned by the Employee.
16. NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be deemed to have been given when mailed
by certified mail, return receipt requested, or delivered by a national
overnight delivery service addressed to the intended recipient as follows:
If to the Employee: Mr. Xxxxx Xxxx
00-00 000xx Xxxxxx
Xxxxxxxx, XX 00000
With a copy to: Xxxxxxx Xxxxx Xxxxxxxxxx & Xxxxx, LLP
00 Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Esquire
If to the Employer: Sonomed, Inc.
c/o Escalon Medical Corp.
000 Xxxx Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Attention: Xxxxxxx X. XxXxxxx,
Chairman and Chief Executive
Officer
-7-
8
With a copy to: Duane, Morris & Heckscher LLP
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx, Esquire
Any party may from time to time change its address for the purpose of notices to
that party by a similar notice specifying a new address, but no such change
shall be deemed to have been given until it is actually received by the party
sought to be charged with its contents.
17. WAIVERS. No claim or right arising out of a breach or default
under this Agreement shall be discharged in whole or in part by a waiver of that
claim or right unless the waiver is supported by consideration and is in writing
and executed by the aggrieved party hereto or his or its duly authorized agent.
A waiver by any party hereto of a breach or default by the other party hereto of
any provision of this Agreement shall not be deemed a waiver of future
compliance therewith, and such provisions shall remain in full force and effect.
18. INDEMNIFICATION. The Employee shall be covered by the same
indemnification provisions and errors and omissions insurance as shall apply to
the other officers of Escalon.
-8-
9
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first above written.
SONOMED, INC.
By: /s/ Xxxxxxx X. XxXxxxx
----------------------------------
Title: Chairman and CEO
-----------------------------
/s/ Xxxxx Xxxx
--------------------------------------
Xxxxx Xxxx
-9-
